Starting from scratch, Gil had slowly built a small business and was running it quite successfully. He was a professional at heart: He gained the confidence of customers and prospects, met their expectations, negotiated better prices, and provided personalized service. Life was good. Things were settling in. And then the tide turned.
Initially, customers’ issues centered around unfair prices (or perceived value), or an occasional slip in quality. More recently, complaints reflected a lack of client interactions via technology (e.g., outdated web presence, no social media). The comfortable days of getting by and resting on his laurels were gone. Gil started seeing a decline in business and realized that he had become complacent. Customers started rejecting the status quo. Something had to be done.
Is this a story many of you can relate to? Working hard to create, build, and improve your organization, and then hoping that these past efforts will continue to propel you into the future? Many organizations go through this phenomenon—consider Research in Motion (RIM, makers of the BlackBerry) and Kodak.
Although most people resist change, when it creeps up on us, we usually accept it and don't often realize change has occurred. Sometimes this change can be harmful, as with Gil not paying attention to his unsatisfied customers. Complacency can creep up even on the best organizations, especially when they have held a leadership position in their industry. But slow change can also be good—for instance, when it’s harnessed to make incremental improvements to an organization’s culture.
In uncertain economic times, however, incremental improvements may not be enough for an organization to maintain its lead or even the status quo. Revolution (or disruption, to use a current buzzword) may be required. In the business world, a revolution often starts in the C suite; when top managers share a vision, they jumpstart the operational engines to make it a reality.
Where do these “revolutionary” visions come from? One way to generate creative ideas is through “adjacency.” Adjacency means systematically exploring all the dimensions of doing business in markets related to the core business. This can be done by preparing a map of possible growth opportunities, moving outward from one adjacent field to the next.
For example, Nike branched out from shoes to golf apparel, balls, and equipment. It further adapted this model as it entered a series of sports markets, from jogging to volleyball to tennis to basketball to soccer. It becomes clear what has been done when an adjacency map is drawn: Key attributes vs. market segments are easily discernible. Essentially, Nike pushed the boundaries of its core business into an adjacent space. The next step would be to expand those boundaries.
Other examples follow:
• Dell is well known for its direct-to-customer model. It expanded to adjacent spaces: new customer segments, new product categories, and new geographies. Are new distribution channels its next frontier?
• Small printing companies have been examining adjacencies of their core business to move to promotional product offerings—i.e., putting images on products rather than just on paper.
• Parts manufacturers in the automotive industry have been identifying the aerospace segment as an adjacent space. Automotive quality initiatives have positioned them well to compete with aerospace parts suppliers, often with superior practices (e.g., just-in-time deliveries).
• Manufacturers of custom controllers supplying the aerospace industry could consider adjacent spaces such as the medical or the nuclear industries to expand their market and product offerings. If they take a disciplined approach, they could create a repeatable formula that generates successive waves of new growth, allowing them to push beyond the boundaries of their core business.
• Food manufacturers with a strong retail channel infrastructure may move beyond their focus on new product offerings for existing segments and start thinking about existing products for new markets (e.g., schools, medical institutions). Other adjacencies might include new geographies and products. (The reverse has also been true as Walmart and Target now offer groceries at their stores).
Adjacency facilitates an organization to look for cracks in the walls of its workflows, and to break through them to not only build on its strengths, knowledge base, and comfort zone, but also discover areas for disruptive change. Adjacency allows an organization to stay within the limits of its present state, yet offers the opportunity to explore the unknown. While this enables incremental improvements, it also helps create an environment that is accepting of change. Building on adjacency encourages us to get past the roadblocks and resistance that have held us back. Adjacency motivates exploration, risk taking, creative and critical thinking, and expands our roles, keeping us from becoming stagnant and complacent.
Business initiatives such as lean, Six Sigma, and TRIZ have helped organizations avoid complacency, sometimes in an evolutionary way, and other times as a full-scale revolution. If you stop and consider your own organization’s progress, you will find that you have already been flirting with adjacent fields. But how many of you have really made it a discipline?
Tell us how you created adjacencies.